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According to Yahoo Finance, Florida’s real estate, one of the most dynamic in the U.S., has seen property values grow over 60% from 2015 to 2022. But not all of the Sunshine State can be considered sound places to invest.
Investing in a city with high crime, natural disaster risk, and a stagnant economy can turn what could have been a dream investment into a costly mistake. Here are 15 Florida cities where purchasing property could be more of a liability than an asset.
Miami
Miami must be known globally for its beaches and nightlife, but it may have a looming environmental crisis. According to Zillow, 26% of homes in Miami are under threat from rising sea levels. Homeowners insurance in Miami-Dade County costs an average of $15,539 a year but generally ranges from $8,617 to $22,398.
Coverage specifics include the home’s age, dwelling coverage, and deductibles. The city’s increased risk of hurricanes and floods at times means additional financial and environmental risks assuming property ownership.
Orlando
Orlando’s real estate market has been torn, with pricing pressures and competitive buyers paying top dollar. The demand for property is very high, and there are limited options.
Thus, finding one that meets the needs and budget is difficult. Moreover, there is frequent traffic because of its visage as a tourist city.
Tampa
Tampa is a competitive and pricey place to buy a home, with continued upward momentum in home prices. As a coastal city, Tampa is prone to hurricanes and tropical storms, which cause property damage and skyrocketing insurance costs.
According to Eaton Realty, Florida’s insurance market is collapsing due to weather events and insurance fraud, making it hard and expensive to get a rental property insurance policy in Tampa.
Jacksonville
Jacksonville has some pitfalls, such as its high crime rate and a sizeable flood risk due to its proximity to the St. Johns River and its susceptibility to hurricane damage.
Some neighborhoods lack good amenities or infrastructure, which affects property value and quality of life. U.S. News reports that Jacksonville’s crime rate is higher than the national average and could shock future homeowners.
Fort Lauderdale
Though Fort Lauderdale was a hot place to buy property before the housing recession, the high risk of hurricane damage and flooding could raise insurance prices. The city’s average per year homeowners insurance is $4,717 for $300,000 in coverage, far higher than the national average of $2,504.
Other problems include potential property damage, fluctuating market values, seasonal variations in rental demand, and high property taxes in some neighborhoods.
St. Petersburg
Due to St. Petersburg’s pleasant location and amenities, its real estate market is highly competitive, which leads to bidding wars and trouble getting property. It is also a coastal city, at risk for hurricanes that cause great damage and make insurance more expensive.
Specifically, property values and the livability of areas are affected. YCharts shows the city’s unemployment rate at 3.30%—slightly down from last month’s 3.40% but below the long-term average of 5.43%.
Ocala
The New York Post reports that Ocala also has one of the highest crime rates in the U.S. and lacks amenities. These factors make the environment particularly difficult for investors who seek to achieve rapid or stable returns.
Kissimmee
Tourism is important to Kissimmee, with research from Experience Kissimmee showing a $10 billion economic impact from 2022 to 2023.
Yet the city is susceptible to hurricanes and other natural disasters that can raise home and flood insurance costs. Furthermore, Kissimmee has high humidity levels all year.
Daytona Beach
According to Yahoo Finance, though Daytona Beach appears to be affordable, there’s no major economic development initiative, so not much property value appreciation could be expected.
Additionally, certain areas have elevated crime rates, which could prevent would-be buyers from buying. Tourism is the city’s economic lynchpin, so events such as the Daytona 500 mean property demand increases in cycles.
Pensacola
Buying Pensacola property may be fraught with a few potential drawbacks: the heavy threat of hurricanes because it is so close to the coast, modest job growth that could affect the housing market, and a rise in property insurance costs.
The concerns include more of a cause for concern than other Florida cities regarding higher crime rates than other cities and a lack of significant new development that would help boost property value.
Lakeland
New construction isn’t keeping up with population growth, which is creating a housing shortage. Meanwhile, a study by DeedClaim found that the Lakeland Winter Haven metro area alone is short 832 units.
This shortage, combined with high demand and low interest rates, is driving a booming housing market where prices are practically being inflated.
Cape Coral
Yet, with Cape Coral’s canal-lined streets, water shortages have also become a worry for the city. Water usage restrictions and rising utility costs have taken a bite out of the city’s appeal.
YCharts reports that the local job market has stagnated, with unemployment rates around 3.60%.
Palm Bay
Palm Bay is affordable and rich in outdoor activities, making it a great place to buy property. Potential downsides include traffic congestion on main roads and worries about the quality of some of the older neighborhoods, but the model also has several advantages.
Limited public transportation options and infrastructure development that occasionally does not keep up with new housing could impact property values and quality of life.
Homestead
The foreclosure problems and high crime rates outweigh Homestead’s affordability. Valiente Law reports that the overall crime rate is 56% higher than the rest of Florida and 66% higher than the national average.
The housing market’s message is instability, as indicated by the city’s highest foreclosure rates in the Miami metro area.
Gainesville
Gainesville, home to the University of Florida, is suffering from rental oversaturation. Rentals are falling, and vacancies are increasing in competition for the city’s student housing market.
Few job opportunities exist outside the university-driven economy, and Gainesville does not attract long-term residents. The system of economic imbalances makes it risky to buy property in Gainesville.
Disclaimer – This list is solely the author’s opinion based on research and publicly available information.
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